I am the Chief Insights Officer for Forbes Media responsible for managing Forbes' Insights thought leadership research division, as well as the Forbes CMO Practice. I am the co-author of "Profitable Brilliance: How Professional Services Firms Become Thought Leaders" now available on Amazon http://amzn.to/OETmMz as the previously published "In the Line of Money: Branding Yourself Strategically to the Financial Elite" available on Amazon http://amzn.to/AuHRN9
Bruce H. Rogers is the co-author of the recently published book Profitable Brilliance: How Professional Service Firms Become Thought Leaders

“We recognized that there were all of these amazing applications like Box and DocuSign that were emerging in 2009, but we wanted to find a more efficient way to distribute them to a larger number of businesses. My co-founder and I thought we could have impact on a global scale if we could enable businesses around to the world to have access to the technology that would help them be more productive, collaborative, save time, money, and really give them the opportunity to succeed in what, at the time, was a very challenging business environment,” says Dan Saks, co-founder, President and Co-CEO of AppDirect.

Nicolas Desmarais (L) and Daniel Saks (R), Co-CEOs, AppDirect

Daniel and his co-founder Nicolas Desmarais, now still in their 20s, set out to do just that. AppDirect was created five years ago to enable the burgeoning app ecosystem for business. In fact, now many of the world’s most popular app stores are assembled and operated by AppDirect. Today the company provides app distribution services to over 20 million businesses around the world, up from just 12 million a year and a half ago. The San Francisco-based company now has over 150 employees around the world. They power the app stores for companies like StaplesStaples, Rackspace, Comcast, Samsung, and some of the largest brands in the world that distribute software. The company has experienced explosive revenue growth of more than 2,000 percent cumulative over the last three years. AppDirect was also recently recognized as one of the Forbes most promising companies.

The company recently raised $35 million in a Series C round led by Mithril Capital Management, Peter Thiel’s growth stage investment firm. AppDirect’s funding also includes investors like Foundry Group, and an additional $9 million series B round from iNovia Capital. The investments all together now add up to just about $60 million raised to date. And as my Forbes colleague Alex Konrad wrote in Forbes recently, “Saks says AppDirect went with Mithril following a two-year courtship because the investment firm is fully on board with holding out to become a multi-billion dollar independent company.”

“We found that businesses want to buy software from a local trusted provider. For example, the way most businesses used to buy software, at least in the small business realm, was they would go to Staples and buy Microsoft or Symantec off the shelf, and then go to a local consultant that would help set up some of the technology. And in the emerging world of cloud, that wasn’t possible, because there weren’t the mechanisms to distribute through an ecosystem. Our vision was to enable that global network or ecosystem for the cloud. We were faced with this challenge, because we were two, young guys working out of an apartment in San Francisco. At the same time, we wanted to partner with some of the largest enterprises in the world,” says Saks.

It was a big, audacious idea that would require some early, good faith financing to get off the ground. And while they were based in San Francisco and Silicon Valley, ground zero for the VC funded world, they decided not to pitch the idea to VCs in the Valley. Instead, they took an investment early on from what they considered more friendly investors outside of the Valley in Montreal. That really enabled the two to grow quickly without many people knowing about their vision or idea. “We came out of stealth mode, and that was at the “Under the Radar” conference in 2011. Having those two years to build up before anyone had heard of us gave us the opportunity to already aggregate so many tools in the market so we were ahead of the curve before anyone could compete,” says Saks.

The AppDirect business model is two-fold. They generate a recurring subscription fee for the stores that they power and on top of that they earn a transaction fee off of all app tools in the ecosystem. They took the approach of enabling billing and identity on the web. ”With applications like Box, DocuSign and Microsoft 365, you’re actually paying for it online and then you get, a free version on your mobile. That’s something that we’ve innovated and we’ve also just announced our mobile strategy. Our vision is that businesses pay for apps, in a recurring way on the web. Those apps should then work seamlessly across all devices. Our technology makes it easy for the business owner or the IT administrator to manage the access and the security for all applications, for all employees across all devices. I see ourselves at the intersection of the software community and businesses of all sizes around the world,” explains Saks.

The growth metrics for cloud-enabled businesses are astronomical. What was a $4 billion marketplace when AppDirect started, is now a $180 billion global marketplace. Daniel and his team think about building the capability to drive recurring transaction fees off of that immense market potential. Mithril sees this as one of the biggest disruptive trends in IT services. ”Ajay Royan, who’s been the managing general partner and Peter’s co-founder at Mithril, said to us–’We believe AppDirect is to the business ecosystem what Facebook is to consumers’,” says Saks.

Dan grew up in an entrepreneurial family. His family had a furniture store in Niagara Falls and also were in the hospitality industry. ”From as early as I can remember, when I was three years old, I used to go into the store with my dad and learned from him and his sales techniques. I remember I sold my first furniture piece as a result of a relationship that I had built with a customer through these letters that I wrote when I was eight years old. I was always passionate about business, in general, but particularly the small business mindset. Over time, I started quite a few businesses on my own. When I was in high school, I started a tour company in Niagara Falls, where we partnered in a way that is very similar to the AppDirect business model. We aggregated travel packages, and then we sold them through hotel concierge services. Then, in college, I started a tour company with some friends where we’d take students on ski trips. My co-founder, Nicolas, also started businesses on his own and had been very entrepreneurial. He had a much more traditional business, which was driveway sealing,” says Saks.

They both had entrepreneurial ambitions, and have known each other for over ten years now. They had been friends for a long time, and both separately ended up in San Francisco. Nicolas was at Bain & Company, where he was consulting to big enterprises on their cloud strategy. At the same time, Daniel was working for a summer at an investment bank in Silicon Valley, learning about the early days of cloud. ”We had the perspective of the impact of cloud on both sides and then having that entrepreneurial background, that’s when we really came together and said, “Man, this is a huge opportunity.” We started to brainstorm, spent quite a few months in the room just thinking about the strategy, reading a lot of analyst reports, and speaking to people in the industry, then really grew the vision from there,” says Saks.

In that summer, in the apartment, they created a list of 100 of the top people they wanted to join the company to help them build the business. They wanted someone with the knowledge of software methodology around cloud, as well as having experience in eCommerce. At the top of the list was Andy Sen, who in the ‘90s worked at Wal-Mart, and helped build their eCommerce platform for photos and then went on to Salesforce and built their AppExchange, which was the first of its kind in terms of a cloud ecosystem. “We cold emailed him from the apartment. I remember the email that I wrote to him said –“Dear Mr. Sen, we have a vision for a cloud ecosystem, and your profile fits. We’d love to have you come visit and meet with us to share the vision.” And we signed it the Recruiting Team. He responded–”Hello, Recruiting Team. I would love to meet you in your office and learn more.” Here is this guy that we were dreaming of joining the company and he wants to meet us, but we don’t even have an office yet,” says Saks.

The would be co-founders ran around downtown San Francisco looking for an office, and found a shared space office, brought Andy in and sold him on the vision. Andy was so thrilled on the vision he joined the team and admitted he would have been fine working out of the apartment to start. Apparently, vision and a huge market opportunity trump office space. ”Andy has been a critical part of our growth. He’s our CTO today and has been a great friend and business partner. One of the things that, I think, makes us work so well together is that we were founded based on the core values that, when I look back, my family believes in, my co-founders’ family believe in, and the whole company AppDirect really lives by. We’ve instilled these great values in the team and now have over 150 people around the world living by these values, based on humility, having a positive mental attitude and intensity,” says Saks.

“Our investors are prepared to support us in doing what’s right for the business in the long-term, so that we can fulfill the mission of making it incredibly easy for businesses around the world to find, buy, and use the tools they need. We are seeing this consistent revenue growth. We see this huge market opportunity. We don’t want to be rushed to exit or sell the company. We want to build an enduring brand and think about the right foundation we can create to scale,” concludes Saks.

Bruce H. Rogers is the co-author of the recently published book Profitable Brilliance: How Professional Service Firms Become Thought Leaders

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